New Book: UNCITRAL Model Law on International Commercial Arbitration A Commentary

Cambridge University Press has recently announced the forthcoming publication of the book, UNCITRAL Model Law on International Commercial Arbitration: A Commentary by a global team of arbitration specialists:

• Ilias Bantekas, Hamad Bin Khalifa University, Qatar
• Pietro Ortolani, Radboud Universiteit Nijmegen
• Shahla Ali, The University of Hong Kong
• Manuel A. Gomez, Florida International University
• Michael Polkinghorne

This book provides a comprehensive commentary on the UNCITRAL Model Law on International Arbitration. Combining both theory and practice, it is written by leading academics and practitioners from Europe, Asia and the Americas to ensure the book has a balanced international coverage. The book not only provides an article-by-article critical analysis, but also incorporates information on the reality of legal practice in UNCITRAL jurisdictions, ensuring it is more than a recitation of case law and variations in legal text. This is not a handbook for practitioners needing a supportive citation, but rather a guide for practitioners, legislators and academics to the reasons the Model Law was structured as it was, and the reasons variations have been adopted.

The full citation of the book is as follows:

Bantekas, I., Ortolani, P., Ali, S., Gomez, M., and Polkinghorne, M. [authors], (2019) The UNICTRAL Model Law on International Commercial Arbitration: A Commentary (Cambridge University Press).

The Adoption of the UNCITRAL Model Law on International Commercial Arbitration in Hong Kong

The first chapter of Professor Gary Bell’s book on The UNCITRAL Model Law and Asian Arbitration Laws: Implementation and Comparisons (2018) Cambridge University Press addresses the Adoption of the UNCITRAL Model Law in Hong Kong and is available here.  The chapter examines Hong Kong’s unique jurisdictional characteristics following its adoption of the Model Law (“ML”) in 2011. While the bulk of the ML provisions were reproduced verbatim or near-verbatim to the Arbitration Ordinance (“AO”), provisions relating to the recognition and enforcement of arbitral awards were not included in the Ordinance. These and other minor omissions have, however, been alternatively provided for. The ML is largely integrated into the new Arbitration Ordinance, in the hope of “[facilitating] the ‘fair and speedy’ resolution of disputes, providing for maximum party autonomy and minimal court intervention.” The new Ordinance: (1) abolishes the distinction between “domestic” and “international” arbitration; (2) provides for interim measures; (3) codifies the new obligation of confidentiality; (4) promotes alternative dispute resolution; and (5) includes provisions in regard to the enforcement of arbitral awards.  The full citation is as follows:

Ali, Shahla F., The Adoption of the UNCITRAL Model Law on International Commercial Arbitration in Hong Kong (November 26, 2018). The UNCITRAL Model Law and Asian Arbitration Laws: Implementation and Comparisons (2018) Cambridge University Press. pp. 9-28 (Gary Bell Ed.) ; University of Hong Kong Faculty of Law Research Paper No. 2019/110. Available at SSRN: https://ssrn.com/abstract=3493453

The Legal Framework for Med-Arb Developments in China

Findings on the legal framework for Med-Arb reform in China including recent cases, institutional rules, advantages and existing pitfalls have been published by Dispute Resolution International available here.  The full citation to the article is: Ali, Shahla F., The Legal Framework for Med-Arb Developments in China: Recent Cases, Institutional Rules and Opportunities (October 18, 2016). Dispute Resolution International, DRI 119. PP. 119-132, 2016 . SSRN: https://ssrn.com/abstract=3216252

UNCITRAL WG II – Expedited Arbitration

At the recent UNCITRAL Working Group II meeting in Vienna in September 2019, the issue of expedited arbitration continued to be the focus of consultation.  Member states and observers offered recommendations on how to strike a balance between timely resolution of disputes and respect for due process. The full report can be found here.

Empirical Findings on Court Mediation Reform

Some of the key findings from a three year research project on court mediation reform are now available on SSRN as follows:

1.  Ali, Shahla F., Nudging Civil Justice: Examining Voluntary and Mandatory Court Mediation User Experience in Twelve Regions (February 18, 2018). Cardozo Journal of Conflict Resolution, Vol. 19, Issue 2, pp. 269-288, 2018 .

Abstract: Nudge theory suggests that positive reinforcement to encourage compliance is at least as effective, if not more effective, than traditional directions issued through legislation. This Article tests nudge theory in the context of court mediation reform by examining whether, and if so how, light nudges encouraging voluntary mediation have a differential effect on civil justice outcomes as compared with more robust nudges through mandated mediation processes. A statistical analysis of 2016–2017 civil justice indicators in twelve regions suggests light nudges, (voluntary court mediation programs, or (self-directed resolution), on average associated with higher overall jurisdictional scores for efficiency and non-discrimination. In comparison, robust nudges, (court-mandated mediation processes) show no significant difference in relation to the quality of civil justice, effective enforcement, accessibility and affordability, and impartiality, and effectiveness between voluntary and mandatory mediation systems in the regions examined.

2.  Ali, Shahla F., Practitioners’ Perception of Court-Connected Mediation in Five Regions: An Empirical Study, Vanderbilt Journal of Transnational Law, Oct 2018, Vol. 51, No. 4

Abstract: Courts throughout the world face the challenge of designing court mediation programs to provide opportunities for party-directed reconciliation on the one hand, while ensuring access to formal legal channels on the other. In some jurisdictions, mandated programs require initial attempts at mediation, while in others, voluntary programs encourage party-selected participation. This Article explores the attitudes and perceptions of eighty-three practitioners implementing court mediation programs in five regions in order to understand the dynamics, challenges, and lessons learned from the perspectives of those directly engaged in the work of administering, representing, and mediating civil claims. Given the highly contextual nature of court mediation programs, this Article highlights achievements, challenges, and lessons learned in the implementation of mediation programs for general civil claims. The principal findings indicate that overall, from the perspective of the court mediation practitioners surveyed, practitioners report slightly higher levels of confidence in mandatory mediation programs, higher perceptions of efficiency with respect to voluntary programs, and regard voluntary and mandatory mediation programs with relatively equal perceptions of fairness. Program achievements largely depend on the functioning of the civil litigation system, the qualities and skill of the mediators, safeguards against bias, participant education, and cultural and institutional support.

 

UNCITRAL WG II on Expedited Arbitration

 

At the most recent UNCITRAL Working Group II on dispute settlement, held in New York in February 2019, the issues of improving the quality and efficiency of arbitral proceedings through expedited arbitration was discussed.   It was agreed that there was need to establish an acceptable international framework on expedited arbitration focusing on aspects such as appointment of emergency arbitrators, preliminary determination and early dismissal of cases by an arbitral tribunal and adjudication. Participants highlighted the vitality of such a set of rules, and the subsequent preparation of Application Guidance on Expedited Arbitration by the Working Group with a close linkage to the existing UNCITRAL Arbitration Rules to ensure flexibility and sound alternatives to parties (UN WG II Report). This area of reform takes into consideration the place of expedited arbitration in ensuring expediency of arbitral proceedings  and the need to protect the interests of parties whose rights are at stake.

Mediating Japan-Korea Trade and Investment Tensions

By Prof James Claxton, Prof Luke Nottage & Dr Brett Williams*

The following guest blog derives from a project on Asia-Pacific international business dispute resolution funded jointly over 2019 by the University of Hong Kong and the University of Sydney. It will be tabled at a second symposium on 15 November. Versions are also published by Kluwer Arbitration Blog.

1. Introduction: complex multi-faceted tensions
   1. A media and geopolitical storm recently erupted after Japan introduced measures affecting exports to the Republic of Korea (Korea). Thunder sounded with Japan’s imposition of certification requirements on three chemicals needed by South Korean companies to make semiconductors, memory chips and displays for consumer electronics (the 4 July Measure). This was followed by lightning and rain when Japan removed Korea from its “white list” of trusted trading partners (the 2 August Measure), then threats by Seoul to retaliate by reducing military-intelligence cooperation and imposing countermeasures on trade. The growing geopolitical tempest has brought about the worst breakdown in cross-border bilateral relations in five decades, generating both regional and global ramifications.[1]
   2. Differing rationales for the geopolitical storm have been given. The Japanese government[2] and media[3] tend to emphasise security concerns, namely on-shipments of such chemicals with potential military applications to North Korea, violating multilateral sanctions. The South Korean government[4] and media,[5] as well as some international news outlets,[6] have often placed more emphasis on the possibility of Japan “retaliating” for an October 2018 judgment of the Supreme Court of Korea. That decision upheld lower court judgments from 2014 finding major Japanese companies, such as Nippon Steel, liable to compensate claimants alleging that they were forced labourers for the Japanese companies during World War 2. The companies, and the Japanese government, have argued that such claims were precluded by a bilateral treaty signed in 1965 to restore diplomatic relations.[7] (Interestingly, similar claims and defences under a different bilateral instruments have been raised before Japanese courts by Chinese war-time labourers, generating a settlement with Nishimatsu group companies.[8]) A few media reports also speculated that Japan introduced export restrictions affecting Korea to bolster the appeal of the Abe Administration in upper House of Councillor elections,[9] but it secured another solid victory anyway.[10] Some media sources also suggest that populist Korean President Moon Jae-in may be “playing to the base” too in domestic politics.[11]
   3. Introducing trade-restrictive measures, however, raises the potential for Korea to complain before the World Trade Organization (WTO). It brings to mind the claim successfully brought by the Obama Administration against China over 2012-14, resulting in China removing export duties and quotas imposed on rare earths, for which it similarly controlled almost all world trade. However, the general exceptions China failed to establish in that case, under Article XX of the General Agreement on Tariffs and Trade (GATT), dealt with health and conservation of natural resources.[12] By contrast, Japan here could be expected to raise national security exceptions under Article XXI. There are even greater differences from a procedural perspective, which we focus on below. If indeed Korea files a formal complaint and an ad hoc panel rules against Japan, this would only come by next year at the earliest. By then the Appellate Body will lack sufficient members (full-time “judges”), due to the Trump Administration blocking new appointments until its concerns about dispute resolution and other aspects of the WTO system are adequately addressed.[13] Accordingly, Japan could appeal any panel decision allowing retaliation for any GATT violations found, and then never come under pressure to remove or adjust its measures against Korea.
   4. The situation becomes even messier when we consider below [[in Part 3]] other potential inter-state dispute resolution processes. Japan could seek arbitration under the 1965 treaty, but that effectively requires the counterparty to provide further consent, which Korea does not seem to want to do. Japan might also consider litigating the treaty before the International Court of Justice (ICJ). Another option is to invoke inter-state arbitration under the Japan-Korea bilateral investment treaty (BIT) in force since 2003, and/or a trilateral investment treaty in force from 2014.[14] However, it may be difficult to prove that the Korean court judgments involved a procedural defect or discrimination towards the Japanese companies creating a denial of justice, contrary to the relevant treaty.
   5. A further possibility, mentioned so far only in a very few media reports but also sketched below [[in Part 4]], is that the companies directly initiate investor-state dispute settlement (ISDS) claims, as provided by both investment treaties in lieu of inter-state arbitration. This could theoretically include an application to the ad hoc arbitration tribunal to issue interim measures preventing enforcement of the Korean Supreme Court ruling, until the tribunal had finally determined claims such as denial of justice.
   6. A major problem for the Japanese companies is that this means they would have to fork out tribunal, lawyer and expert witness fees – often hefty, even if the claim ultimately succeeds.[15] A major problem for the Japanese government, in turn, is that ISDS claims brought by the companies would likely further incense not only the current Korean government, but also some groups within Korean society (including an association of judges).[16] They and the then opposition party became critical of ISDS especially as it was negotiated into the Korea-US Free Trade Agreement (KORUS), brought into effect from March 2012, and as the first-ever treaty-based claim was brought against Korea from late 2012 by a Belgian subsidiary of US-based Lone Star.[17] One Australian NGO even interprets a recent Korean newspaper report of current Prime Minister Lee Nak-Yeon as suggesting that Korea may “abolish” ISDS.[18] More likely he was signalling the need for further rethinking of Korea’s investment treaty policy and practice, which has anyway been evolving (eg regarding ISDS transparency).[19] But an ISDS claim by Japanese companies and/or an award favouring Lone Star would further inflame simmering political tensions, especially as this year another US investor (Gale) has filed a notice to initiate ISDS regarding a development in Incheon,[20] while Chinese and now Malaysian investors have filed notices regarding projects on Jeju Island.[21]
   7. As we conclude [[in Part 5]], given this complex set of potential claims across multiple forums, the best way forward seems to be a negotiated overall settlement, perhaps facilitated by formal mediation.